Today, the Office for National Statistics released a three decade perspective on the housing market. They have observed six key trends spanning the decades
- Current rising house price: ONS have noted that despite blips in property prices, on average house prices have increased by 6.9% per year since 1980. In no other industry would the public tolerate such massive inflation. The biggest drop was in 2009 where they fell by 7.6% but although the economic downturn in 2008 led to stricter lending criteria, house prices have been steadily rising. Housing transactions have reduced – halving between 2006 and 2009 – and whilst they are increasing, house prices remaining sky high means that many cannot get onto the property ladder
- Declining number of first time buyers: their graph clearly shows that this decline began several years before the tighter lending rules that came in after the economic downturn, which suggests that house prices are simply too high to allow mass home ownership. The recent recession also affected younger professionals more heavily and wages for more junior jobs have remained very stagnant and completely out of sync with rising house prices.
- Decreasing numbers of younger homeowners: this is a very worrying trend. The number of 25-34 year olds owning their own home has reduced from 67% in 1991 to just 43% in 2011/12. In contrast the number of over 75s owning their own home has increased from less than 50% to over 70%. It is the generational shift of wealth that is concerning – read our guest blog on the Intergenerational Foundation’s website.
- Increasing deposits paid by first time buyers: this is another reason why there is a decline in first time buyers. With the enormous sums expected to be raised in order to purchase a home – in London the average has now reached over £100,000 – and rapidly increased rents, it is surprising that anyone can manage to get on the housing ladder!
- Increase in private rental sector stock: this doubled between 1980 and 2012 alongside a reduction in council housing. This has led to more vulnerable people being rehoused in the PRS and this sector has the worst conditions (increasing the likelihood of fuel poverty), no security of tenure and many tenants face amateur and rogue landlords.
- Fewer new homes are being built: the overall levels of house building have declined since 1980, despite increasing population and decreasing average household size. The UK currently needs to build 250,000 homes a year to keep pace, let alone clear the shortfall from previous years; last financial year only 112,830 homes were completed. This is why on 31st January, Generation Rent will join other housing campaigns on the March for Homes. Politicians and the GLA need to act rapidly to build affordable homes for all.
The conclusion of the report was increasing demand and limited supply. We know this. But we also know that these are not the only problems facing the PRS. So, on 4th February, Generation Rent is hosting Rent Freedom Day where you can debate the issues facing renters, meet with your MP to voice your concerns and attend a range of workshops on relevant topics of interest.